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On Thursday, DirecTV shareholders voted to approve AT&T’s offer to acquire the company for $48.5 billion. Now the only obstacle to merging into AT&T is approval by the FCC and the DOJ. Interestingly, the proxy statement released to shareholders reveals that DirecTV also considered merging with Dish instead.

At a special shareholders’ meeting on Thursday, more than 99% of all present shareholders voted to approve the sale of DirecTV to AT&T. The shareholders’ vote doesn’t mean much if the FCC or the Department of Justice block the deal, though. However, as part of the preparation for the shareholders’ meeting, a “proxy statement” was issued to shareholders detailing the terms of the agreement and the rationale for the deal.

According to the proxy [PDF], DirecTV first received an offer from AT&T last year and rejected it in August 2013. A few months later, the “chairman of Company A” met with DirecTV to discuss a merger. At the time, they both acknowledged that a type of merger would be difficult to pass muster. On the day that the Comcast/Time Warner Cable deal was announced, DirecTV internally discussed merging with “Company A” again. In March, AT&T and DirecTV signed confidentiality agreements necessary for “due diligence” (the responsible examination of private and public aspects of a business as a prerequisite for a transaction). Shortly after that, “Company A” and DirecTV also entered into a similar agreement. Ultimately, efforts with “Company A” led nowhere, and DirecTV announced a deal with AT&T in May.

Prior to the announcement of the deal, DirecTV contracted McKinsey & Company, Inc. (a management consulting firm) to give a strategic update on “Company A” to assist in making a final decision on whether to go with AT&T or “Company A”. McKinsey’s update included discussions about its spectrum holdings and the alternatives “Company A” was considering (including partnering with a carrier to build a network, building a new wireless broadband network on its own, or selling the spectrum). From this and the fact “Company A” has a chairman, we were able to identify “Company A” as Dish Network, who acquired PCS H block spectrum earlier this year that it could use for LTE-based wireless broadband.

It makes sense that DirecTV ended up moving forward with AT&T, as a deal to merge with Dish had been blocked before, and the precedent established by the failed AT&T/T-Mobile deal would make it even harder for them to try again now. Regardless of whether the deal passes or not, AT&T will not be penalized financially for it. But that is not true on DirecTV’s side. Since shareholders agreed to the deal, the clauses for the failure of the deal’s completion go into effect. According to the proxy, DirecTV is on the hook to pay AT&T nearly $1.5 billion if the deal fails. This means DirecTV has a rather large financial incentive to not have the deal fail.

One point in DirecTV’s favor is that there is not a lot of focus on the deal right now. The brunt of the public and private focus is on Comcast’s deal to acquire Time Warner, because of Comcast’s increasing role as a gatekeeper for delivery of content, services (such as Netflix), and information as the largest broadband provider in the country due to the effective monopoly that Comcast and Time Warner possess in nearly all of its markets.

However, AT&T’s acquisition of DirecTV can be just as harmful, since it incentivizes AT&T to not invest in newer, better content delivery schemes and platforms. It also firmly moves AT&T into “growing conglomerate” status, meaning that AT&T will continue to acquire companies in different industries to further its reach and control of the market. Given that Comcast was allowed to acquire NBCUniversal from General Electric, why shouldn’t AT&T be allowed to acquire a national media company like CBS or Viacom after acquiring DirecTV? Where does it end? Hopefully it ends before it can begin, because it would be difficult to stop once it starts.

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